Gangnam-gu Apartment Jeonse Prices Rose 9.32% Since Second Half of Last Year... Twice the Seoul Average

[Asia Economy Reporter Donghyun Choi] Since the second half of last year, the jeonse prices of apartments in Gangnam-gu, Seoul have been rapidly rising, according to a recent investigation.

On the 11th, real estate information company Economy Man Lab reviewed the housing price status from KB Real Estate and found that the average jeonse price per 3.3㎡ of apartments in Gangnam-gu was about 27.697 million KRW in June last year, but rose to 30.278 million KRW in February this year, marking a 9.32% increase over eight months. This is more than twice the increase rate of Seoul apartment jeonse prices (4.26%) during the same period.

Among the 25 autonomous districts in Seoul during the same period, four out of the top five districts with the highest increase were in the Gangnam area. In June last year, the average jeonse price per 3.3㎡ of apartments in Songpa-gu was about 20.041 million KRW, which rose by 6.18% to 21.279 million KRW in February this year. Yangcheon-gu followed with a 5.87% increase, while Seocho-gu and Gwangjin-gu also rose by 5.83% and 5.15%, respectively.

This rise in apartment jeonse prices is also confirmed by actual transaction prices. According to the Ministry of Land, Infrastructure and Transport, a 59.9㎡ (exclusive area) apartment in ‘Daechi I-Park’ located in Daechi-dong, Gangnam-gu, Seoul, was traded at 800 million KRW in June last year, but was traded at 1.05 billion KRW in February this year, rising by 250 million KRW in eight months.

In Jamsil-dong, Songpa-gu, Seoul, an 84.8㎡ apartment in ‘Jamsil Els’ was leased for 850 million KRW in June last year, but was traded at 1.05 billion KRW in February this year, increasing by 200 million KRW.

A 101.2㎡ apartment in ‘Mokdong New Town 7’ located in Mokdong, Yangcheon-gu, Seoul, was about 680 million KRW in June last year but was traded at 850 million KRW in February this year, rising by 170 million KRW.

The rise in apartment jeonse prices in Gangnam-gu, Songpa-gu, and Yangcheon-gu is attributed to the reduction in jeonse supply of major apartments with prestigious school districts due to the abolition of autonomous private high schools and changes in the college entrance system, as well as the low supply of new apartments. Additionally, with the Bank of Korea’s base interest rate cut becoming a foregone conclusion, jeonse prices are expected to rise further, especially in school districts and preferred areas.

Oh Dae-yeol, head of the research team at Economy Man Lab, explained, "With the reform of the college entrance system, price increases are occurring due to the shortage of apartment jeonse supply centered on locations with excellent school districts," adding, "Due to government real estate regulations, the burden of loans and taxes has increased, leading to demand choosing jeonse over purchase, and the waiting demand for subscription due to the price ceiling system is also increasing, so jeonse prices are expected to rise for some time."